Aeolus Pharmaceuticals (AOLS) 10-K 20 Dec 16 2016 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Sep. 30, 2016	Dec. 16, 2016	Mar. 31, 2016
Document And Entity Information
Entity Registrant Name	AEOLUS PHARMACEUTICALS, INC.
Entity Central Index Key	1,261,734
Document Type	10-K
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		152,085,825
Public Float			$ 10,925,560
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 3,155	$ 94
Accounts receivable	750	1,585
Deferred subcontractor cost	0	21
Prepaids and other current assets	230	45
Total current assets	4,135	1,745
Investment in CPEC LLC	32	32
Total assets	4,167	1,777
Current liabilities:
Accounts payable and accrued expenses	972	1,598
Deferred revenue	0	22
Note payable to shareholders, net of debt discount of $273,000	0	727
Note payable to shareholders redemption liability	0	275
Total current liabilities	972	2,622
Total liabilities	972	2,622
Commitments and Contingencies (Notes E and K)
Stockholders' equity (deficit):
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized: Series A nonredeemable convertible preferred stock, 1,250,000 shares authorized as of September 30, 2016 and 2015, respectively; no shares issued and outstanding as of September 30, 2016 and 2015, respectively	0	0
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized: Series B nonredeemable convertible preferred stock, 1,600,000 and 1,600,000 shares authorized as of September 30, 2016 and 2015, respectively; zero and 526,080 shares issued and outstanding as of September 30, 2016 and 2015, respectively	0	5
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized: Series C nonredeemable convertible preferred stock, 5,000 and zero shares authorized as of September 30, 2016 and September 30, 2015, respectively; 4,500 and zero shares issued and outstanding as of September 30, 2016 and September 30, 2015, respectively	0	0
Common stock, $0.01 par value per share, 200,000,000 shares authorized; 135,930,068 and 135,850,068 shares issued and outstanding at September 30, 2015 and 2014, respectively	1,520	1,359
Additional paid-in capital	191,863	184,421
Accumulated deficit	(190,188)	(186,630)
Total stockholders' equity	3,195	(845)
Total liabilities and stockholders' equity	$ 4,167	$ 1,777

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Stockholder's deficit:
Note payable discount	$ 0	$ 273,000
Preferred stock par value	$ 0.01	$ 0.01
Preferred stock, authorized shares	10,000,000	10,000,000
Series A nonredeemable convertible preferred stock, authorized shares	1,250,000	1,250,000
Series A nonredeemable convertible preferred stock, issued shares	0	0
Series A nonredeemable convertible preferred stock, outstanding shares	0	0
Series B nonredeemable convertible preferred stock, authorized shares	1,600,000	1,600,000
Series B nonredeemable convertible preferred stock, issued shares		526,080
Series B nonredeemable convertible preferred stock, outstanding shares		526,080
Series C nonredeemable convertible preferred stock, authorized shares	5,000	0
Series C nonredeemable convertible preferred stock, issued shares	4,500	0
Series C nonredeemable convertible preferred stock, outstanding shares	4,500	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, Authorized	200,000,000	200,000,000
Common stock, Issued	152,085,825	135,930,068
Common stock, outstanding	152,085,825	135,930,068

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Contract revenue	$ 2,076	$ 3,111
Costs and expenses:
Research and development	2,881	3,509
General and administrative	2,468	2,228
Total costs and expenses	5,349	5,737
Loss from operations	(3,273)	(2,626)
Interest expense	285	2
Net loss	(3,558)	(2,628)
Deemed divided on Series C preferred stock	(2,486)	0
Net loss attributable to common stockholders	(6,044)	(2,628)
Net loss attributable to common stockholders - basic	(6,044)	(2,628)
Net loss attributable to common stockholders - diluted	$ (6,044)	$ (2,628)
Basic net loss per common share	$ (0.04)	$ (0.02)
Diluted net loss per common share	$ (0.04)	$ (0.02)
Weighted average common shares outstanding:
Basic	148,668	135,883
Diluted	148,668	135,883

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) - USD ($) $ in Thousands	Series B Preferred Stock	Series C Preferred Stock	Common Stock [Member]	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance - Shares at Sep. 30, 2014	526,080		135,850,068
Beginning Balance - Amount at Sep. 30, 2014	$ 5		$ 1,359	$ 184,223	$ (184,002)	$ 1,585
Exercise of warrants, Shares			80,000
Exercise of warrants, Amount				20		20
Stock-based compensation				164		164
Issuance of warrants to consultants				14		14
Net loss					(2,628)	(2,628)
Ending Balance, Shares at Sep. 30, 2015	526,080		135,930,068
Ending Balance, Amount at Sep. 30, 2015	$ 5		$ 1,359	184,421	(186,630)	(845)
Stock-based compensation				141		141
Common stock sales, net of issuance costs, Shares			10,215,275
Common stock sales, net of issuance costs, Amount			$ 102	1,903		2,005
Preferred stock sales, net of issuance costs, Shares		4,500
Preferred stock sales, net of issuance costs, Amount		$ 0		4,165		4,165
Note payable conversion, shares			5,414,402
Note payable conversion, amount			$ 54	1,233	0	1,287
Conversion of Series B Preferred to common stock, Shares	(526,080)		526,080
Conversion of Series B Preferred to common stock, Amount	$ (5)		$ 5
Net loss					(3,558)	(3,558)
Ending Balance, Shares at Sep. 30, 2016	0	4,500	152,085,825
Ending Balance, Amount at Sep. 30, 2016	$ 0	$ 0	$ 1,520	$ 191,863	$ (190,188)	$ 3,195

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income (loss)	$ (3,558)	$ (2,628)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of discount on notes payable to shareholders	285	0
Accrued interest	0	2
Noncash compensation	141	178
Change in assets and liabilities:
Accounts receivable	835	(26)
Deferred subcontractor cost	21	405
Prepaid expenses and other assets	(185)	1
Accounts payable and accrued expenses	(626)	46
Deferred revenue	(22)	(421)
Net cash (used in) provided by operating activities	(3,109)	(2,443)
Cash flows from financing activities:
Proceeds from exercise of common stock warrants	0	20
Proceeds from issuance of notes payable to shareholders	0	1,000
Proceeds from issuance of common stock and common stock warrants, net	2,005	0
Proceeds from issuance of preferred stock and preferred stock warrants, net	4,165	0
Net cash provided by financing activities	6,170	1,020
Net (decrease) increase in cash and cash equivalents	3,061	(1,423)
Cash and cash equivalents at beginning of period	94	1,517
Cash and cash equivalents at end of period	3,155	94
Supplemental disclosure of non-cash financing activities:
Conversion of notes payable to shareholders for common stock and warrants	1,000	0
Conversion of accrued interest on notes payable to shareholders for common stock and warrants	12	0
Issuance of warrants for financing costs	266	0
Deemed dividend on Series C preferred stock	(2,486)	0
Notes payable to shareholders redemption liability	$ 0	$ 275

A. Organization, Business and S

A. Organization, Business and Summary of Significant Accounting Policies	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
A. Organization, Business and Summary of Significant Accounting Policies	Organization The accompanying audited consolidated financial statements include the accounts of Aeolus Pharmaceuticals, Inc. and its wholly-owned subsidiary, Aeolus Sciences, Inc. (collectively "we," "us," "Company" or "Aeolus"). All significant intercompany accounts and transactions have been eliminated in consolidation. Aeolus is a Delaware corporation. The Company's primary operations are located in Mission Viejo, California. Business Aeolus is developing a new class of broad-spectrum, catalytic antioxidant compounds based on technology discovered at Duke University and National Jewish Health. The Company's lead compound, 10150, is a metalloporphyrin specifically designed to neutralize reactive oxygen and nitrogen species. The Company is developing 10150 as a medical countermeasure against the pulmonary effects of radiation exposure under a contract ("BARDA Contract") valued at up to $118.4 million with the Biomedical Advanced Research and Development Authority ("BARDA"), a division of the Department of Health and Human Services ("HHS"). Additionally, Aeolus receives development support from the National Institutes of Health ("NIH") for development of the compound as a medical countermeasure against radiation and chemical exposure.

B. Summary of Significant Accou

B. Summary of Significant Accounting Policies	12 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
B. Summary of Significant Accounting Policies	Basis of Presentation The consolidated financial statements include the accounts of Aeolus and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated. The Company uses the equity method to account for its 35% ownership interest in CPEC, which is further discussed in Note D. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, allowance for doubtful accounts and stock-based compensation. Actual results could differ from those estimates. Cash and Cash Equivalents The Company invests available cash in short-term bank deposits. Cash and cash equivalents include investments with maturities of three months or less at the date of purchase. The carrying value of cash and cash equivalents approximate their fair market value at September 30, 2016 and 2015 due to their short-term nature. Also, the Company maintains cash balances with financial institutions in excess of federally insured limits. The Company does not anticipate any losses with such cash balances. Significant customers and accounts receivable For the years ended September 30, 2016 and 2015, the Company’s only customer was BARDA. For the years ended September 30, 2016 and 2015, revenues from BARDA comprised 100% of total revenues. As of September 30, 2016 and 2015, the Company’s receivable balances were comprised 100% from this customer. Unbilled accounts receivable, included in accounts receivable, totaling $490,000 and $589,000 as of September 30, 2016 and 2015, respectively, relate to work that has been performed, though invoicing has not yet occurred. All of the unbilled receivables are expected to be billed and collected within the next year. Accounts receivable are stated at invoice amounts and consists of amounts due from the BARDA Contract. If necessary, the Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable. This provision is based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. As of September 30, 2016 and 2015, an allowance for doubtful accounts was not recorded as the collection history from the Company’s customers indicated that collection was probable. Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high quality financial institutions. Management believes that the financial risks associated with its cash and cash equivalents and investments are minimal. Because accounts receivable consist entirely of amounts due from the U.S. federal government agencies, management deems there to be minimal credit risk. Revenue Recognition Aeolus recognizes revenue in accordance with the authoritative guidance for revenue recognition. Revenue is recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller's price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. The BARDA Contract is classified as a "cost-plus-fixed-fee" contract. Aeolus recognizes government contract revenue in accordance with the authoritative guidance for revenue recognition including the authoritative guidance specific to federal government contracts. Reimbursable costs under the contract primarily include direct labor, subcontract costs, materials, equipment, travel, and indirect costs. Aeolus estimates subcontractor costs, materials and related revenue for some vendors when invoices are not received timely. We receive regular updates from our subcontractors regarding estimated completion of individual projects. Management evaluates the status of each project with respect to budgeted work completed, actual work completed, and cost of actual work completed. We are required to provide BARDA with monthly reports in addition to our bi-weekly conference calls with BARDA regarding the progress of each project. In addition, we receive a fixed fee on consultant labor and subcontract labor under the BARDA Contract, which is unconditionally earned as allowable costs are incurred and is not contingent on success factors. Reimbursable costs under this BARDA Contract, including the fixed fee, are generally recognized as revenue in the period the reimbursable costs are incurred and become billable. Fair Value of Financial Instruments The carrying amounts of financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt, and redemption liability, approximate their fair values due to their short maturities. Fair Value Measurements The Company adopted Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, for financial and non-financial assets and liabilities. ASC 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The Company utilizes the market approach. The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: · Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. · Level 3: Unobservable inputs that reflect the reporting entity's own assumptions. The redemption liability, discussed further at Note F. Debt, was measured at fair value on a recurring basis as of September 30, 2015 and is summarized below (in thousands): Fair value at September 30, 2015 Level 1 Level 2 Level 3 $ — $ 275 $ — The following table summarizes, as of September 30, 2016, the redemption liability activity subject to Level 2 inputs which are measured on a recurring basis: Fair value measurement of redemption liability Balance at September 30, 2015 $ 275 Conversion of convertible promissory notes with redemption feature (275 ) Change in fair value of redemption liability — Balance at September 30, 2016 $ — Research and Development Research and development costs are expensed in the period incurred. Leases The Company leases office space and office equipment under month to month operating lease agreements. For the years ended September 30, 2016 and 2015, total rent expense was approximately $42,000 and $42,000, respectively. Income Taxes The Company recognizes liabilities or assets for the deferred tax consequences of temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. A valuation allowance is established when management determines that it is more likely than not that all or a portion of a deferred tax asset will not be realized. Management evaluates the Company's ability to realize its net deferred tax assets on a quarterly basis and valuation allowances are provided, as necessary. During this evaluation, management reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the Company's ability to realize its deferred tax assets to determine if a valuation allowance is required. Adjustments to the valuation allowance will increase or decrease the Company's income tax provision or benefit. Management also applies the relevant guidance to determine the amount of income tax expense or benefit to be allocated among continuing operations, discontinued operations, and items charged or credited directly to stockholders' equity (deficit). A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation process, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Net Income (Loss) Per Common Share The Company computes basic net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common stock outstanding during the period. The Company computes diluted net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common and dilutive potential common shares outstanding during the period. Potential common shares outstanding consist of stock options, warrants and convertible preferred stock using the treasury stock method and are excluded if their effect is anti-dilutive. Diluted weighted average common shares did not include any incremental shares for the fiscal year ended September 30, 2016 and 2015. Diluted weighted average common shares excluded incremental shares from common and preferred shares and warrants of approximately 85,606,000 and 29,536,000 for the fiscal year 2016 and 2015, respectively, due to their anti-dilutive effect. In thousands, except per share data Fiscal Year Ended September 30, 2016 2015 Numerator: Net loss $ (3,558 ) $ (2,628 ) Less deemed dividend on Series C preferred stock (2,486 ) — Net loss attributable to common stockholders – basic $ (6,044 ) $ (2,628 ) Net loss attributable to common stockholders – diluted $ (6,044 ) $ (2,628 ) Denominator: Weighted-average shares used in computing net loss per share attributable to common stockholders – basic 148,668 135,883 Effect of potentially dilutive securities: Common stock warrants — — Convertible preferred warrants — — Convertible preferred stock — — Common stock options — — Non-participating common stock warrants — — Weighted-average shares used in computing net loss per share attributable to common stockholders – diluted 148,668 135,883 Basic net loss per common share $ (0.04 ) $ (0.02 ) Diluted net loss per common share $ (0.04 ) $ (0.02 ) Accounting for Stock-Based Compensation The Company recognizes stock-based compensation expense in the statement of operations based upon the fair value of the equity award amortized over the vesting period. Segment Reporting The Company currently operates in one segment.

C. Liquidity

C. Liquidity	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
C. Liquidity	As of September 30, 2016, we had approximately $3,155,000 of cash and cash equivalents, an increase of $3,061,000 from September 30, 2015. The increase in cash was primarily due to our 2015 capital raise, which was offset by cash used in operations. In order to fund on-going operating cash requirements, or to accelerate or expand our oncology and other programs, we may need to raise significant additional funds. We had a net loss of $3,558,000 for the fiscal year ended September 30, 2016, compared to a net loss of $2,628,000 for the fiscal year ended September 30, 2015. For the same periods, we had cash outflows from operations of approximately $3,109,000 and cash outflows from operations of approximately $2,443,000, respectively, with the outflows increasing in 2016 due to lower revenue from BARDA. Our ongoing future cash requirements will depend on numerous factors, particularly the progress of our development programs, clinical trials and our ability to negotiate and complete collaborative agreements or out-licensing arrangements. In order to help fund our on-going operating cash requirements, we intend to seek new collaborations for our antioxidant research program that include initial cash payments and on-going research support. In addition, we might sell additional shares of our stock and/or convertible debentures and explore other strategic and financial alternatives, including a merger with another company, the sale of stock and/or debt, the establishment of new collaborations for current research programs that include initial cash payments and ongoing research support and the out-licensing of our compounds for development by a third party. We expect to incur additional losses and negative cash flow from operations for several more years. Under the BARDA Contract, substantially all of the costs of the development of 10150 as a medical countermeasure for pulmonary injuries resulting from an acute exposure to radiation from a radiological/nuclear accident or attack, particularly injuries associated with ARS or DEARE could be paid for by the U.S. government through BARDA funding. We recognized approximately $2,076,000 in revenue during the fiscal year ended September 30, 2016 related to the BARDA Contract.

D. Investments

D. Investments	12 Months Ended
	Sep. 30, 2016
Equity Method Investments and Joint Ventures [Abstract]
D. Investments	Investment in CPEC LLC The Company uses the equity method to account for its 35% ownership interest in CPEC. CPEC had $91,000 of net assets at each of September 30, 2016 and 2015. Aeolus’ 35% share of CPEC’s net assets, which is approximately $32,000, is included in other assets and CPEC has no operations or activities unrelated to the out licensing of bucindolol. The remaining membership interest in CPEC of 65% is owned by Endo Pharmaceuticals.

E. Commitments

E. Commitments	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
E. Commitments	The Company acquires assets still in development and enters into license and research and development arrangements with third parties that often require milestone and royalty payments to the third party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent upon the successful achievement of an important point in the development life-cycle of the pharmaceutical product (e.g., approval of the product for marketing by a regulatory agency). If required by the arrangement, the Company may also be required to make royalty payments based upon a percentage of the net sales of the pharmaceutical product in the event that regulatory approval for marketing is obtained. Because of the contingent nature of these payments, they are not included in the table of contractual obligations. No milestones have been met, nor have any payments been made, as of September 30, 2016. We are also obligated to pay patent filing, prosecution, maintenance and defense costs, if any, for the intellectual property the Company has licensed from National Jewish Health ("NJH"), National Jewish Medical and Research Center (the "NJMRC") and Duke University. These arrangements may be material individually, and in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period, the aggregate charge to expense could be material to the results of operations in any one period. In addition, these arrangements often give Aeolus the discretion to unilaterally terminate development of the product, which would allow Aeolus to avoid making the contingent payments; however, Aeolus is unlikely to cease development if the compound successfully achieves clinical testing objectives.

F. Debt

F. Debt	12 Months Ended
	Sep. 30, 2016
F. Debt
F. Debt	Convertible Promissory Notes On September 29, 2015, the Company received funding in exchange for issuance of convertible promissory notes (the "Notes") from Biotechnology Value Fund, L.P. and other affiliates of BVF Partners, L.P. The Notes have an aggregate principal balance of $1,000,000, accrue interest at a rate of 6% per annum and have a scheduled maturity date of September 28, 2016 (the "Maturity Date"). The outstanding principal and accrued interest on the Notes shall automatically convert into Company equity securities issued in a Qualified Financing (as defined below) at a conversion rate carrying a 15% discount to the lowest price per share (or share equivalent) issued in a Qualified Financing (an "Automatic Conversion"). If, prior to the Maturity Date, the Company enters into an agreement pertaining to a Corporate Transaction (as defined below) and the Note has not been previously converted pursuant to an Automatic Conversion, then, the outstanding principal balance and unpaid accrued interest of the Note shall automatically convert in whole into the right of the holder to receive, in lieu of any other payment and in cancellation of the Note, an amount in cash upon closing of the Corporate Transaction equal to two times the outstanding principal amount of the Note. For purposes of the foregoing: "Qualified Financing" means a bona fide new money equity securities financing on or before the Maturity Date with total proceeds to the Company of not less than four million dollars; and "Corporate Transaction" means a sale, lease or other disposition of all or substantially all of the Company's assets or a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization own less than fifty percent (50%) of the voting power of the surviving entity immediately after such consolidation, merger or reorganization. As of September 30, 2015, the $1,000,000 principal balance of the Notes is recorded in the financial statements at face value and is net with a discount of $273,000 as a result of separating the fair value of the Qualified Financing redemption discount ("Redemption Feature") of 15% on the price per share in the Notes. The Redemption Feature qualifies as a derivative and is subject to fair value treatment. The Redemption Feature was being amortized over the expected life of the derivative, and the amortization expense is presented net with the interest expense from the Notes, yielding an effective interest rate of 40% that is different than the 6% stated in the Notes. On December 11, 2015, following the completion of a Qualified Financing described above, the principal and accrued interest amounts under the Notes were converted into 5,414,402 shares of the Company's common stock and warrants to purchase an additional 5,414,402 shares of the Company's common stock at an exercise price per share of $0.22 subject to adjustment. As a result, the Notes were no longer outstanding as of that date.

G. Stockholders' Equity (Defici

G. Stockholders' Equity (Deficit)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
G. Stockholders' Equity (Deficit)	Basis of Presentation Preferred Stock The Certificate of Incorporation of the Company authorizes the issuance of up to 10,000,000 shares of Preferred Stock, at a par value of $0.01 per share, of which 1,250,000 shares are designated Series A Convertible Preferred Stock and 1,600,000 shares are designated Series B Convertible Preferred Stock and 5,000 shares are designated Series C Convertible Preferred Stock (the "Series C Stock"). The Board of Directors has the authority to issue Preferred Stock in one or more series, to fix the designation and number of shares of each such series, and to determine or change the designation, relative rights, preferences, and limitations of any series of Preferred Stock, without any further vote or action by the stockholders of the Company. There are no shares of Series A Convertible Preferred Stock issued or outstanding. As of September 30, 2016 and 2015, zero and 526,080 shares of Series B Stock were outstanding, respectively. The decrease in Series B shares outstanding is due to the conversion of the remaining shares into common shares in June 2016. As of September 30, 2016 and 2015, 4,500 and zero shares of Series C Stock were outstanding, respectively. With respect to dividend rights and rights upon liquidation, winding up and dissolution, the Series B Stock ranks pari passu pari passu Each share of Series B Stock is convertible into one share of common stock. The Series B Stock can be converted into common stock at any time upon the election of the holders of the Series B Stock except to the extent such conversion would result in the holders of Series B Stock owning in the aggregate more than 9.99% of the outstanding common stock. The Series B Stock is not entitled to vote on any matter submitted to the vote of holders of the common stock except that the Company must obtain the approval of a majority of the outstanding shares of Series B Stock to either amend the Company’s Certificate of Incorporation in a manner that would adversely affect the Series B Stock (including by creating an additional class or series of stock with rights that are senior or pari passu The Series C Stock is non-voting stock. Each share of Series C Stock is convertible into 4,545 shares of our common stock except to the extent such conversion would result in such holder of Series C Stock, and its affiliates, owning in the aggregate more than 9.99% of the outstanding common stock. Dividends on the Series C Stock are due whenever dividends are due on the Company's common stock on an as-if-converted basis, but shall be subordinate to any dividends due to holders of the Company's Series B Stock as a result of such common stock dividends. The Series C Stock shall also be junior to the Series B Stock in the event of liquidation of the Company. On December 10, 2015, the Company entered into securities purchase agreements with certain accredited investors to sell and issue (i) 4,500 preferred stock units issued to existing investors, Biotechnology Value Fund, L.P. and other affiliates of BVF Partners, L.P., for an aggregate purchase price of $4.5 million, and (ii) an aggregate of 10,215,275 common units issued at purchase price of $0.22 per unit, resulting in aggregate gross proceeds to the Company of approximately $6.75 million. The preferred units collectively consist of (i) 4,500 shares of Series C Convertible Preferred Stock of the Company that are collectively convertible into an aggregate of 20,454,546 common shares and (ii) warrants to purchase an aggregate of 20,454,546 Common Shares, in each case subject to adjustment. The warrants have an initial exercise price of $0.22 per share. The warrants may not be exercised until after 90 days following the date of issuance. The Series C Stock and warrants contain provisions restricting the conversion or exercise of such securities in circumstances where such event would result in the holder and its affiliates to beneficially own in excess of 9.99% of the Company’s outstanding common stock. The fair value of the December 10, 2015 financing warrants issued was estimated to be $4,476,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 109.74%, risk free interest rate of 1.67%, and an expected life equal to the five year contractual term. The proceeds from the December 10, 2015 financing were allocated based upon the relative fair values of the warrants and preferred shares issued in the transaction. The allocation of the proceeds based on relative fair values of the instruments resulted in recognition of a discount on the Series C Preferred Stock of $2,486,000 from a beneficial conversion feature, which is being amortized from the date of issuance to the earliest redemption date of 90 days post issuance. For the nine months ended June 30, 2016 the Company recognized $2,486,000 of amortization of the discount on Series C Preferred Stock as deemed dividends charged to additional paid in capital. The value of the beneficial conversion feature is calculated as the difference between the effective conversion price of the Series C Preferred Stock and the fair market value of the common stock into which the Series C Preferred Stock are convertible at the commitment date. Common Stock On December 10, 2015, the Company entered into securities purchase agreements with certain accredited investors to sell and issue (i) an aggregate of 10,215,275 common units issued at a purchase price of $0.22 per unit. Each common unit consists of one share of the Company’s common stock and a five year warrant to purchase one share of the Company’s common stock, subject to adjustment. The warrants may not be exercised until after 90 days following the date of issuance. The warrants contain provisions restricting the conversion or exercise of such securities in circumstances where such event would result in the holder and its affiliates to beneficially own in excess of 9.99% of the Company’s outstanding common stock. On September 29, 2015, the Company received funding in the form of convertible promissory notes (the “BVF Notes”) from Biotechnology Value Fund, L.P. and certain other affiliates of BVF Partners, L.P. The BVF Notes have an aggregate principal balance of $1,000,000, accrue interest at a rate of 6% per annum and have a scheduled maturity date of September 28, 2016. The outstanding principal and accrued interest on the BVF Notes will automatically convert into Company equity securities, provided a Qualified Financing of not less than $4,000,000 occurs. On December 11, 2015, following the completion of a Qualified Financing described above, the principal and accrued interest amounts under the BVF Notes were converted into 5,414,402 shares of the Company’s common stock and warrants to purchase an additional 5,414,402 shares of the Company’s common stock at an exercise price per share of $0.22 subject to adjustment. As a result, the BVF Notes were no longer outstanding as of that date. Warrants As of September 30, 2016, warrants to purchase an aggregate of 52,947,877 shares of common stock were outstanding. Details of the warrants for common stock outstanding at September 30, 2016 were as follows: Number of Shares Exercise Price Expiration Date 1,337,627 $ 0.40 March 2017 325,000 $ 0.40 April 2017 300,000 $ 0.258 June 2017 50,000 $ 0.26 June 2017 140,000 $ 0.35 October 2017 12,205,000 $ 0.25 February 2018 1,242,000 $ 0.25 March 2018 50,000 $ 0.49 January 2020 37,298,250 $ 0.22 December 2020 52,947,877 As of September 30, 2015, warrants to purchase an aggregate of 15,949,627 shares of common stock were outstanding. Details of the warrants for common stock outstanding at September 30, 2015 were as follows: Number of Shares Exercise Price Expiration Date 50,000 $ 0.50 May 2016 50,000 $ 0.50 July 2016 50,000 $ 1.00 July 2016 50,000 $ 1.50 July 2016 50,000 $ 2.00 July 2016 50,000 $ 2.50 July 2016 1,337,627 $ 0.40 March 2017 325,000 $ 0.40 April 2017 300,000 $ 0.258 June 2017 50,000 $ 0.26 June 2017 140,000 $ 0.35 October 2017 12,205,000 $ 0.25 February 2018 1,242,000 $ 0.25 March 2018 50,000 $ 0.49 January 2020 15,949,627 As of September 30, 2015, one warrant with an exercise price of $0.01 to purchase an aggregate of 896,037 shares of preferred stock was outstanding. Below is a summary of warrant activity for the last two fiscal years ended September 30: Weighted Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term (in years) Value Outstanding at 9/30/2014 16,925,664 $ 0.27 3.1 years $ 215,048 Granted 50,000 $ 0.49 $ - Exercised (80,000 ) $ 0.25 $ 10,975 Cancelled (50,000 ) $ 0.38 $ - Forfeited - $ - $ — Outstanding at 9/30/2015 16,845,664 $ 0.27 2.2 years $ 206,626 Granted 37,298,250 $ 0.22 $ 1,864,913 Exercised — $ — $ — Cancelled (1,196,037 ) $ 0.34 $ 156,000 Forfeited — $ — $ — Outstanding at 9/30/2016 52,947,877 $ 0.23 3.3 years $ — Exercisable at 9/30/2016 52,947,877 $ 0.23 3.3 years $ —

H. Stock-Based Compensation

H. Stock-Based Compensation	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
H. Stock-Based Compensation	As an integral component of a management and employee retention program designed to motivate, retain and provide incentive to the Company’s management, employees and key consultants, the Board of Directors approved the 2016 Stock Incentive Plan (the “2016 Plan”) and reserved 25,000,000 shares of common stock for issuance under the 2016 Plan. As of September 30, 2016, 25,000,000 shares were available to be granted under the 2016 Plan. The exercise price of the incentive stock options (“ISOs”) granted under the 2016 Plan must not be less than the fair market value of the common stock as determined on the date of the grant. The options may have a term up to 10 years. Options typically vest immediately or up to one year following the date of the grant. Below is a summary of stock option activity for the last two fiscal years ended September 30: Weighted Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term (in years) Value Outstanding at 9/30/2014 11,596,591 $ 0.43 6.1 years $ 1 Granted 775,000 $ 0.27 $ - Exercised - $ - $ - Cancelled (207,000 ) $ 0.90 $ - Forfeited - $ - $ - Outstanding at 9/30/2015 12,164,591 $ 0.42 5.4 years $ 1 Granted 700,000 $ 0.23 $ - Exercised - $ - $ - Cancelled (660,591 ) $ 0.82 $ - Forfeited - $ - $ - Outstanding at 9/30/2016 12,204,000 $ 0.38 5.0 years $ 1 Exercisable at 9/30/2016 12,041,498 $ 0.39 4.9 years $ 1 Stock options granted to consultants during fiscal year 2016 and 2015 were fully vested when issued or vested over a twelve month period. Stock option expense for stock options granted to consultants was zero for fiscal year 2016 and 2015, respectively. For the fiscal years 2016 and 2015, all stock options were issued at or above fair market value of a share of common stock. The weighted-average grant-date fair value of options granted during fiscal years 2016 and 2015 was $0.19 and $0.24, respectively. A summary of the status of non-vested shares for the fiscal years ended September 30 was: Weighted Average Number Grant-Date of Shares Fair Value Unvested at September 30, 2014 168,752 $ 0.22 Granted 775,000 $ 0.24 Vested (781,250 ) $ 0.24 Forfeited - $ - Unvested at September 30, 2015 162,502 $ 0.23 Granted 700,000 $ 0.19 Vested (700,000 ) $ 0.24 Forfeited - $ - Unvested at September 30, 2016 162,502 $ 0.16 The total unrecognized compensation expense for outstanding stock options was $15,000 as of September 30, 2016, which will be recognized over a weighted average period of five months. The total fair value of shares vested during fiscal years 2016 and 2015 was $142,000 and $156,000, respectively. The details of stock options for the fiscal year ended September 30, 2016 are as follows: Options Outstanding Options Exercisable Weighted Weighted Number Weighted Average Number Weighted Average Range of Outstanding at Average Remaining Exercisable at Average Remaining Exercise September 30, Exercise Contractual September 30, Exercise Contractual Prices 2016 Price Life (in years) 2016 Price Life (in years) $ 0.19-$0.20 250,000 $ 0.19 9.42 125,000 $ 0.19 9.42 $ 0.21-$0.30 3,537,500 $ 0.27 5.83 3,499,998 $ 0.27 5.80 $ 0.31-$0.40 6,551,500 $ 0.39 4.83 6,551,500 $ 0.39 4.83 $ 0.41-$0.50 502,000 $ 0.45 5.24 502,000 $ 0.45 5.24 $ 0.51-$0.60 968,250 $ 0.59 2.75 968,250 $ 0.59 2.75 $ 0.61-$0.70 56,000 $ 0.68 0.04 56,000 $ 0.68 0.04 $ 0.71-$0.80 80,750 $ 0.76 4.23 80,750 $ 0.76 4.23 $ 0.81-$0.90 256,000 $ 0.90 0.78 256,000 $ 0.90 0.78 $ 0.91-$1.19 2,000 $ 1.19 0.58 2,000 $ 1.19 0.58 12,204,000 $ 0.38 4.95 12,041,498 $ 0.39 4.89 Stock-based compensation expense recognized in the statement of operations is as follows (in thousands): For the fiscal year ended September 30, 2016 2015 Research and Development Expenses $ — $ — General and Administrative Expenses 141 178 Total Stock-based Compensation Expense $ 141 $ 178 The fair value of the options associated with the above compensation expense was determined at the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: For the fiscal year ended September 30, 2016 2015 Dividend yield 0 % 0 % Unvested forfeiture rate 7.87 % 5.35 % Expected volatility 117 % 137 % Risk-free interest rate 1.42 % 1.70 % Expected option life after shares are vested 5.27 years 5.27 years

I. Income Taxes

I. Income Taxes	12 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
I. Income Taxes	As of September 30, 2016 and 2015, the Company had federal net operating loss (“NOL”) carry-forwards of $119,215,000 and $115,515,000, respectively and state operating loss carry-forwards of $42,615,000 and $38,916,000, respectively. The use of these federal and state NOL carry-forwards might be subject to limitation under the rules regarding a change in stock ownership as determined by the Internal Revenue Code (the “Code”). The Company may have had a change of control under Section 382 of the Code during fiscal 2004 and 2006; however, a complete analysis of the limitation of the NOL carry-forwards will not be completed until the time the Company projects it will be able to utilize such NOLs. The federal net operating and the state net operating losses began to expire in 2010. Additionally, the Company had federal research and development carry-forwards as of September 30, 2016 and 2015 of $4,198,000 and $4,127,000, respectively. The Company had state research and development carry-forwards as of September 30, 2016 and 2015 of $1,530,000 and $1,452,000, respectively. Significant components of the Company’s deferred tax assets at September 30, 2016 and 2015 consisted of the following (in thousands): 2016 2015 Accrued payroll related liabilities $ 885 $ 1,036 Depreciation and amortization 469 586 Total deferred tax assets 1,354 1,622 State taxes (94 ) (113 ) Total deferred tax liabilities (94 ) (113 ) Net deferred tax assets 1,260 1,509 Valuation allowance for deferred assets (1,260 ) (1,509 ) Net deferred tax asset $ — $ — Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, all of the deferred tax assets have been fully offset by a valuation allowance. The change in the valuation allowance is primarily a result of the net operating loss carry-forwards. Taxes computed at the statutory federal income tax rate of 34% are reconciled to the provision for income taxes as follows (dollars in thousands): 2016 2015 Effective income tax rate 0 % 0 % United States Federal income tax at statutory rate $ (1,209 ) $ (891 ) State income taxes (net of federal benefit) 1 1 NQSO forfeiture 151 234 Prior year deferred true up — 39 Change in valuation reserves (212 ) (153 ) FIN 48 1,329 883 Other (57 ) (111 ) Provision for income taxes $ 2 $ 2 At September 30, 2016, we had unrecognized tax benefits of $5,208,000, all of which would impact the effective tax rate if recognized, however a valuation allowance would be recorded against this amount. During fiscal 2016, unrecognized tax benefits increased to $5,208,000 as a result of the tax positions taken in prior years and current year. No interest and penalties have been provided for with respect to the unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Amount (in thousands) Unrecognized tax benefits at October 1, 2015 $ 5,085 Additions for tax positions related to current year 117 Additions/reductions for tax positions taken in prior years 6 Unrecognized tax benefits at September 30, 2016 $ 5,208 The Company’s federal income tax returns for the tax years 2012 to 2014 remain open to examination. The Company’s California income tax returns for the tax years 2011 to 2014 remain open to examination. A reconciliation of the current year tax provision is as follows: Current – Federal $ — Current – State 2 2 Deferred - Federal 194 Deferred – State 55 249 Less: Valuation Allowance (249 ) — Total current and deferred $ 2

J. Contingencies

J. Contingencies	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
J. Contingencies	Duke Licenses The Company has obtained exclusive worldwide licenses (the "Duke Licenses") from Duke University ("Duke") to develop, make, have made, use and sell products using certain technology in the field of free radical and antioxidant research, developed by certain scientists at Duke. Future discoveries in the field of antioxidant research from these scientists' laboratories at Duke are also covered by the Duke Licenses. The Duke Licenses require the Company to use its best efforts to pursue development of products using the licensed technology and compounds. These efforts are to include the manufacture or production of products for testing, development and sale. Aeolus is also obligated to use its best efforts to have the licensed technology cleared for marketing in the United States by the U.S. Food and Drug Administration and in other countries in which Aeolus intends to sell products using the licensed technology. Aeolus will pay royalties to Duke on net product sales during the terms of the Duke Licenses, and milestone payments upon certain regulatory approvals and annual sales levels. In addition, Aeolus is obligated under the Duke Licenses to pay all or a portion of patent prosecution, maintenance and defense costs. Unless earlier terminated, the Duke Licenses continue until the expiration of the last to expire issued patent on the licensed technology. National Jewish Medical and Research Center Agreements Aeolus has an exclusive worldwide license ("NJH License") from National Jewish Health to develop, make, have made, use and sell products using certain technology developed by certain scientists at NJH. The NJH License requires Aeolus to use commercially reasonable efforts to diligently pursue the development and government approval of products using the licensed technology. Aeolus will be obligated to pay royalties to NJH on net product sales during the term of the NJH License and a milestone payment upon regulatory approval, if obtained. In addition, Aeolus is obligated under the NJH License to pay all or a portion of patent prosecution, maintenance and defense costs. Unless earlier terminated, the NJH License continues until the expiration of the last to expire issued patent on the licensed technology.

K. Agreements

K. Agreements	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
K. Agreements	Elan Corporation, plc In May 2002, the Company entered into a collaboration transaction with affiliates of Elan Corporation, plc for the development of the Company's catalytic antioxidant compounds as a treatment for tissue damage from cancer radiation and chemotherapy. Although Elan and the Company terminated this collaboration in January 2003, the Company will pay Elan a royalty on net sales of its catalytic antioxidant products sold, if any, for the prevention and treatment of radiation-induced and chemotherapy-induced tissue damage.

L. Litigation

L. Litigation	12 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
L. Litigation	From time to time the Company may be subject to various lawsuits and claims with respect to matters arising out of the normal course of our business. Management does not believe these cases will have a material effect on our financial statements.

M. Recently Issued Accounting P

M. Recently Issued Accounting Pronouncements	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
M. Recently Issued Accounting Pronouncements	From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-14, which deferred the effective date of ASU 2014-09 Revenue from Contracts with Customers (ASC 606), which updates the principles for recognizing revenue. ASU 2014-09 also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is evaluating the potential impacts of the new standard on its existing revenue recognition policies and procedures. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU 2014-15 requires that an entity's management evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. ASU 2014-15 is effective for annual periods beginning after December 15, 2016 and for interim periods thereafter. The Company is evaluating the potential impacts of this new standard on its reporting process.

B. Organization, Business and S

B. Organization, Business and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Sep. 30, 2016
B. Organization Business And Summary Of Significant Accounting Policies Policies
Organization	The accompanying audited consolidated financial statements include the accounts of Aeolus Pharmaceuticals, Inc. and its wholly-owned subsidiary, Aeolus Sciences, Inc. (collectively "we," "us," "Company" or "Aeolus"). All significant intercompany accounts and transactions have been eliminated in consolidation. Aeolus is a Delaware corporation. The Company's primary operations are located in Mission Viejo, California.
Business	Aeolus is developing a new class of broad-spectrum, catalytic antioxidant compounds based on technology discovered at Duke University and National Jewish Health. The Company's lead compound, 10150, is a metalloporphyrin specifically designed to neutralize reactive oxygen and nitrogen species. The Company is developing 10150 as a medical countermeasure against the pulmonary effects of radiation exposure under a contract ("BARDA Contract") valued at up to $118.4 million with the Biomedical Advanced Research and Development Authority ("BARDA"), a division of the Department of Health and Human Services ("HHS"). Additionally, Aeolus receives development support from the National Institutes of Health ("NIH") for development of the compound as a medical countermeasure against radiation and chemical exposure.
Basis of Presentation	The consolidated financial statements include the accounts of Aeolus and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated. The Company uses the equity method to account for its 35% ownership interest in CPEC, which is further discussed in Note D.
Use of Estimates	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, allowance for doubtful accounts and stock-based compensation. Actual results could differ from those estimates.
Cash and Cash Equivalents	The Company invests available cash in short-term bank deposits. Cash and cash equivalents include investments with maturities of three months or less at the date of purchase. The carrying value of cash and cash equivalents approximate their fair market value at September 30, 2016 and 2015 due to their short-term nature. Also, the Company maintains cash balances with financial institutions in excess of federally insured limits. The Company does not anticipate any losses with such cash balances.
Significant customer and accounts receivable	For the years ended September 30, 2016 and 2015, the Company’s only customer was BARDA. For the years ended September 30, 2016 and 2015, revenues from BARDA comprised 100% of total revenues. As of September 30, 2016 and 2015, the Company’s receivable balances were comprised 100% from this customer. Unbilled accounts receivable, included in accounts receivable, totaling $490,000 and $589,000 as of September 30, 2016 and 2015, respectively, relate to work that has been performed, though invoicing has not yet occurred. All of the unbilled receivables are expected to be billed and collected within the next year. Accounts receivable are stated at invoice amounts and consists of amounts due from the BARDA Contract. If necessary, the Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable. This provision is based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. As of September 30, 2016 and 2015, an allowance for doubtful accounts was not recorded as the collection history from the Company’s customers indicated that collection was probable.
Concentrations of credit risk	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high quality financial institutions. Management believes that the financial risks associated with its cash and cash equivalents and investments are minimal. Because accounts receivable consist entirely of amounts due from the U.S. federal government agencies, management deems there to be minimal credit risk.
Revenue Recognition	Aeolus recognizes revenue in accordance with the authoritative guidance for revenue recognition. Revenue is recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller's price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. The BARDA Contract is classified as a "cost-plus-fixed-fee" contract. Aeolus recognizes government contract revenue in accordance with the authoritative guidance for revenue recognition including the authoritative guidance specific to federal government contracts. Reimbursable costs under the contract primarily include direct labor, subcontract costs, materials, equipment, travel, and indirect costs. Aeolus estimates subcontractor costs, materials and related revenue for some vendors when invoices are not received timely. We receive regular updates from our subcontractors regarding estimated completion of individual projects. Management evaluates the status of each project with respect to budgeted work completed, actual work completed, and cost of actual work completed. We are required to provide BARDA with monthly reports in addition to our bi-weekly conference calls with BARDA regarding the progress of each project. In addition, we receive a fixed fee on consultant labor and subcontract labor under the BARDA Contract, which is unconditionally earned as allowable costs are incurred and is not contingent on success factors. Reimbursable costs under this BARDA Contract, including the fixed fee, are generally recognized as revenue in the period the reimbursable costs are incurred and become billable.
Fair Value of Financial Instruments	The carrying amounts of financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt, and redemption liability, approximate their fair values due to their short maturities.
Fair Value Measurements	The Company adopted Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, for financial and non-financial assets and liabilities. ASC 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The Company utilizes the market approach. The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: · Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. · Level 3: Unobservable inputs that reflect the reporting entity's own assumptions. The redemption liability, discussed further at Note F. Debt, is measured at fair market value on a recurring basis as of September 30, 2015 and is summarized below (in thousands): Fair value at September 30, 2015 Level 1 Level 2 Level 3 $ — $ 275 $ — The following table summarizes, as of September 30, 2016, the redemption liability activity subject to Level 2 inputs which are measured on a recurring basis: Fair value measurement of redemption liability Balance at September 30, 2015 $ 275 Conversion of convertible promissory notes with redemption feature (275 ) Change in fair value of redemption liability — Balance at September 30, 2016 $ —
Research and Development	Research and development costs are expensed in the period incurred.
Leases	The Company leases office space and office equipment under month to month operating lease agreements. For the years ended September 30, 2016 and 2015, total rent expense was approximately $42,000 and $42,000, respectively.
Income Taxes	The Company recognizes liabilities or assets for the deferred tax consequences of temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. A valuation allowance is established when management determines that it is more likely than not that all or a portion of a deferred tax asset will not be realized. Management evaluates the Company's ability to realize its net deferred tax assets on a quarterly basis and valuation allowances are provided, as necessary. During this evaluation, management reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the Company's ability to realize its deferred tax assets to determine if a valuation allowance is required. Adjustments to the valuation allowance will increase or decrease the Company's income tax provision or benefit. Management also applies the relevant guidance to determine the amount of income tax expense or benefit to be allocated among continuing operations, discontinued operations, and items charged or credited directly to stockholders' equity (deficit). A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation process, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
Net Income (Loss) Per Common Share	The Company computes basic net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common stock outstanding during the period. The Company computes diluted net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common and dilutive potential common shares outstanding during the period. Potential common shares outstanding consist of stock options, warrants and convertible preferred stock using the treasury stock method and are excluded if their effect is anti-dilutive. Diluted weighted average common shares did not include any incremental shares for the fiscal year ended September 30, 2016 and 2015. Diluted weighted average common shares excluded incremental shares from common and preferred shares and warrants of approximately 85,606,000 and 29,536,000 for the fiscal year 2016 and 2015, respectively, due to their anti-dilutive effect. In thousands, except per share data Fiscal Year Ended September 30, 2016 2015 Numerator: Net loss $ (3,558 ) $ (2,628 ) Less deemed dividend on Series C preferred stock (2,486 ) — Net loss attributable to common stockholders – basic $ (6,044 ) $ (2,628 ) Net loss attributable to common stockholders – diluted $ (6,044 ) $ (2,628 ) Denominator: Weighted-average shares used in computing net loss per share attributable to common stockholders – basic 148,668 135,883 Effect of potentially dilutive securities: Common stock warrants — — Convertible preferred warrants — — Convertible preferred stock — — Common stock options — — Non-participating common stock warrants — — Weighted-average shares used in computing net loss per share attributable to common stockholders – diluted 148,668 135,883 Basic net loss per common share $ (0.04 ) $ (0.02 ) Diluted net loss per common share $ (0.04 ) $ (0.02 )
Accounting for Stock-Based Compensation	The Company recognizes stock-based compensation expense in the statement of operations based upon the fair value of the equity award amortized over the vesting period.
Segment Reporting	The Company currently operates in one segment.

B. Organization, Business and21

B. Organization, Business and Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Sep. 30, 2016
B. Organization Business And Summary Of Significant Accounting Policies Tables
Fair Value Measurements	Fair value at September 30, 2015 Level 1 Level 2 Level 3 $ — $ 275 $ —
Fair value measurements of warrants using significant unobservable inputs	Fair value measurement of redemption liability Balance at September 30, 2015 $ 275 Conversion of convertible promissory notes with redemption feature (275 ) Change in fair value of redemption liability — Balance at September 30, 2016 $ —
Schedule of Earnings Per Share, Basic and Diluted	In thousands, except per share data Fiscal Year Ended September 30, 2016 2015 Numerator: Net loss $ (3,558 ) $ (2,628 ) Less deemed dividend on Series C preferred stock (2,486 ) — Net loss attributable to common stockholders – basic $ (6,044 ) $ (2,628 ) Net loss attributable to common stockholders – diluted $ (6,044 ) $ (2,628 ) Denominator: Weighted-average shares used in computing net loss per share attributable to common stockholders – basic 148,668 135,883 Effect of potentially dilutive securities: Common stock warrants — — Convertible preferred warrants — — Convertible preferred stock — — Common stock options — — Non-participating common stock warrants — — Weighted-average shares used in computing net loss per share attributable to common stockholders – diluted 148,668 135,883 Basic net loss per common share $ (0.04 ) $ (0.02 ) Diluted net loss per common share $ (0.04 ) $ (0.02 )

G. Stockholder's Equity (Tables

G. Stockholder's Equity (Tables)	12 Months Ended
	Sep. 30, 2016
G. Stockholders Equity Tables
Warrants for Common Stock Outstanding	Number of Shares Exercise Price Expiration Date 1,337,627 $ 0.40 March 2017 325,000 $ 0.40 April 2017 300,000 $ 0.258 June 2017 50,000 $ 0.26 June 2017 140,000 $ 0.35 October 2017 12,205,000 $ 0.25 February 2018 1,242,000 $ 0.25 March 2018 50,000 $ 0.49 January 2020 37,298,250 $ 0.22 December 2020 52,947,877 Number of Shares Exercise Price Expiration Date 50,000 $ 0.50 May 2016 50,000 $ 0.50 July 2016 50,000 $ 1.00 July 2016 50,000 $ 1.50 July 2016 50,000 $ 2.00 July 2016 50,000 $ 2.50 July 2016 1,337,627 $ 0.40 March 2017 325,000 $ 0.40 April 2017 300,000 $ 0.258 June 2017 50,000 $ 0.26 June 2017 140,000 $ 0.35 October 2017 12,205,000 $ 0.25 February 2018 1,242,000 $ 0.25 March 2018 50,000 $ 0.49 January 2020 15,949,627
Summary Of Warrant Activity	Weighted Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term (in years) Value Outstanding at 9/30/2014 16,925,664 $ 0.27 3.1 years $ 215,048 Granted 50,000 $ 0.49 $ - Exercised (80,000 ) $ 0.25 $ 10,975 Cancelled (50,000 ) $ 0.38 $ - Forfeited - $ - $ — Outstanding at 9/30/2015 16,845,664 $ 0.27 2.2 years $ 206,626 Granted 37,298,250 $ 0.22 $ 1,864,913 Exercised — $ — $ — Cancelled (1,196,037 ) $ 0.34 $ 156,000 Forfeited — $ — $ — Outstanding at 9/30/2016 52,947,877 $ 0.23 3.3 years $ — Exercisable at 9/30/2016 52,947,877 $ 0.23 3.3 years $ —

H. Stock-Based Compensation (Ta

H. Stock-Based Compensation (Tables)	12 Months Ended
	Sep. 30, 2016
H. Stock-based Compensation Tables
Summary Of Stock Option Activity	Weighted Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term (in years) Value Outstanding at 9/30/2014 11,596,591 $ 0.43 6.1 years $ 1 Granted 775,000 $ 0.27 $ - Exercised - $ - $ - Cancelled (207,000 ) $ 0.90 $ - Forfeited - $ - $ - Outstanding at 9/30/2015 12,164,591 $ 0.42 5.4 years $ 1 Granted 700,000 $ 0.23 $ - Exercised - $ - $ - Cancelled (660,591 ) $ 0.82 $ - Forfeited - $ - $ - Outstanding at 9/30/2016 12,204,000 $ 0.38 5.0 years $ 1 Exercisable at 9/30/2016 12,041,498 $ 0.39 4.9 years $ 1
Schedule of non-vested shares	Weighted Average Number Grant-Date of Shares Fair Value Unvested at September 30, 2014 168,752 $ 0.22 Granted 775,000 $ 0.24 Vested (781,250 ) $ 0.24 Forfeited - $ - Unvested at September 30, 2015 162,502 $ 0.23 Granted 700,000 $ 0.19 Vested (700,000 ) $ 0.24 Forfeited - $ - Unvested at September 30, 2016 162,502 $ 0.16
Details Of Stock Options	Options Outstanding Options Exercisable Weighted Weighted Number Weighted Average Number Weighted Average Range of Outstanding at Average Remaining Exercisable at Average Remaining Exercise September 30, Exercise Contractual September 30, Exercise Contractual Prices 2016 Price Life (in years) 2016 Price Life (in years) $ 0.19-$0.20 250,000 $ 0.19 9.42 125,000 $ 0.19 9.42 $ 0.21-$0.30 3,537,500 $ 0.27 5.83 3,499,998 $ 0.27 5.80 $ 0.31-$0.40 6,551,500 $ 0.39 4.83 6,551,500 $ 0.39 4.83 $ 0.41-$0.50 502,000 $ 0.45 5.24 502,000 $ 0.45 5.24 $ 0.51-$0.60 968,250 $ 0.59 2.75 968,250 $ 0.59 2.75 $ 0.61-$0.70 56,000 $ 0.68 0.04 56,000 $ 0.68 0.04 $ 0.71-$0.80 80,750 $ 0.76 4.23 80,750 $ 0.76 4.23 $ 0.81-$0.90 256,000 $ 0.90 0.78 256,000 $ 0.90 0.78 $ 0.91-$1.19 2,000 $ 1.19 0.58 2,000 $ 1.19 0.58 12,204,000 $ 0.38 4.95 12,041,498 $ 0.39 4.89
Stock-based compensation expense	For the fiscal year ended September 30, 2016 2015 Research and Development Expenses $ — $ — General and Administrative Expenses 141 178 Total Stock-based Compensation Expense $ 141 $ 178
Assumptions Of Stock Based Compensation	For the fiscal year ended September 30, 2016 2015 Dividend yield 0 % 0 % Unvested forfeiture rate 7.87 % 5.35 % Expected volatility 117 % 137 % Risk-free interest rate 1.42 % 1.70 % Expected option life after shares are vested 5.27 years 5.27 years

I. Income Taxes (Tables)

I. Income Taxes (Tables)	12 Months Ended
	Sep. 30, 2016
I. Income Taxes Tables
Deferred tax assets	2016 2015 Accrued payroll related liabilities $ 885 $ 1,036 Depreciation and amortization 469 586 Total deferred tax assets 1,354 1,622 State taxes (94 ) (113 ) Total deferred tax liabilities (94 ) (113 ) Net deferred tax assets 1,260 1,509 Valuation allowance for deferred assets (1,260 ) (1,509 ) Net deferred tax asset $ — $ —
Tax rate reconciliation	2016 2015 Effective income tax rate 0 % 0 % United States Federal income tax at statutory rate $ (1,209 ) $ (891 ) State income taxes (net of federal benefit) 1 1 NQSO forfeiture 151 234 Prior year deferred true up — 39 Change in valuation reserves (212 ) (153 ) FIN 48 1,329 883 Other (57 ) (111 ) Provision for income taxes $ 2 $ 2
Unrecognized tax benefits	Amount (in thousands) Unrecognized tax benefits at October 1, 2015 $ 5,085 Additions for tax positions related to current year 117 Additions/reductions for tax positions taken in prior years 6 Unrecognized tax benefits at September 30, 2016 $ 5,208
Reconciliation of the current year tax provision	Current – Federal $ — Current – State 2 2 Deferred - Federal 194 Deferred – State 55 249 Less: Valuation Allowance (249 ) — Total current and deferred $ 2

B. Summary of Significant Acc25

B. Summary of Significant Accounting Policies - Fair Value (Details)	Sep. 30, 2015shares
Fair Value Inputs Level 1 Member
Fair Value Measurements
Redemption liability	0
Fair Value Inputs Level 2 Member
Fair Value Measurements
Redemption liability	275
Fair Value Inputs Level 3 Member
Fair Value Measurements
Redemption liability	0

B. Summary of Significant Acc26

B. Summary of Significant Accounting Policies - Warrant Fair Value (Details 1) $ in Thousands	12 Months Ended
	Sep. 30, 2016USD ($)
Fair value measurements of redemption liability
Beginning balance	$ 275
Issuance of convertible promissory notes with redemption feature	(275)
Change in fair value of redemption liability	0
Ending balance	$ 0

B. Summary of Significant Acc27

B. Summary of Significant Accounting Policies - Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net loss	$ (3,558)	$ (2,628)
Less deemed dividend on Series C preferred stock	(2,486)	0
Net loss attributable to common stockholders - basic	(6,044)	(2,628)
Net loss attributable to common stockholders - diluted	$ (6,044)	$ (2,628)
Denominator:
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic	148,668	135,883
Effect of potentially dilutive securities: Common stock warrants	0	0
Effect of potentially dilutive securities: Convertible preferred warrants	0	0
Effect of potentially dilutive securities: Convertible preferred stock	0	0
Effect of potentially dilutive securities: Common stock options	0	0
Effect of potentially dilutive securities: Non-participating common stock warrants	0	0
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted	148,668	135,883
Basic net income (loss) per common share	$ (0.04)	$ (0.02)
Diluted net income (loss) per common share	$ (0.04)	$ (0.02)

C Liquidity (Details Narrative)

C Liquidity (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014
C Liquidity Details Narrative
Cash and cash equivalents	$ 3,155	$ 94	$ 1,517
Net Income (loss)	(3,558)	(2,628)
Cash (outflows) inflows from operations	$ (3,109)	$ (2,443)

D. Investments (Details Narrati

D. Investments (Details Narrative)	Sep. 30, 2016
D. Investments Details Narrative
Equity method investment ownership interest	35.00%

G. Stockholders' Equity - Warra

G. Stockholders' Equity - Warrants (Details) - shares	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Number of Shares	52,947,877	15,949,627
$ 0.50
Number of Shares		50,000
Expiration Date		May16
$ 0.50
Number of Shares		50,000
Expiration Date		Jul16
$ 1
Number of Shares		50,000
Expiration Date		Jul16
$ 1.50
Number of Shares		50,000
Expiration Date		Jul16
$ 2
Number of Shares		50,000
Expiration Date		Jul16
$ 2.50
Number of Shares		50,000
Expiration Date		Jul16
$ 0.40
Number of Shares	1,337,627	1,337,627
Expiration Date	Mar17	Mar17
$ 0.40
Number of Shares	325,000	325,000
Expiration Date	Apr17	Apr17
$ 0.258
Number of Shares	300,000	300,000
Expiration Date	Jun17	Jun17
$ 0.26
Number of Shares	50,000	50,000
Expiration Date	Jun17	Jun17
$ 0.35
Number of Shares	140,000	140,000
Expiration Date	Oct17	Oct17
$ 0.25
Number of Shares	12,205,000	12,205,000
Expiration Date	Feb18	Feb18
$ 0.25
Number of Shares	1,242,000	1,242,000
Expiration Date	Mar18	Mar18
$ 0.49
Number of Shares	50,000	50,000
Expiration Date	Jan20	Jan20
$ 0.22
Number of Shares	37,298,250
Expiration Date	Dec20

G. Stockholders' Equity - War31

G. Stockholders' Equity - Warrant Activity (Details 2) - Warrant [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Number of Shares
Outstanding beginning balance	16,845,664	16,925,664
Granted	37,298,250	50,000
Exercised	0	(80,000)
Cancelled	(1,196,037)	(50,000)
Forfeited	0	0
Outstanding ending balance	52,947,877	16,845,664
Exercisable	52,947,877	16,845,664
Exercise Price
Outstanding beginning balance	$ 0.27	$ 0.27
Granted	0.22	0.49
Exercised	0	0.25
Expired or Canceled	0.34	0.38
Forfeited	0	0
Outstanding ending balance	0.23	0.27
Exercisable	$ 0.23	$ 0.27
Remaining Contractual Term (in years)
Outstanding beginning balance	2 years 2 months 12 days	3 years 1 month 6 days
Outstanding ending balance	3 years 3 months 18 days	2 years 2 months 12 days
Exercisable	3 years 3 months 18 days	2 years 2 months 12 days
Aggregate Intrinsic Value
Outstanding beginning balance	$ 206,626	$ 215,048
Granted	1,864,913
Exercised		10,975
Canceled	156,000
Outstanding ending balance	0	206,626
Exercisable	$ 0	$ 206,626

H. Stock-Based Compensation - S

H. Stock-Based Compensation - Stock Option Activity (Details) - Employee Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Number of Shares
Outstanding beginning balance	12,164,591	11,596,591
Granted	700,000	775,000
Exercised	0	0
Cancelled	(660,591)	(207,000)
Forfeited	0	0
Outstanding ending balance	12,204,000	12,164,591
Exercisable	12,041,498	12,002,089
Exercise Price
Outstanding beginning balance	$ 0.42	$ 0.43
Granted	.23	0.27
Exercised	0	0
Cancelled	0.82	0.90
Forfeited	0	0
Outstanding ending balance	0.38	0.42
Exercisable	$ 0.39	$ 0.42
Remaining Contractual Term (in years)
Outstanding beginning balance	5 years 4 months 24 days	6 years 1 month 6 days
Outstanding ending balance	5 years	5 years 4 months 24 days
Exercisable	4 years 10 months 24 days	5 years 4 months 24 days
Aggregate Intrinsic Value
Outstanding beginning balance	$ 1	$ 1
Outstanding ending balance	1	1
Exercisable	$ 1	$ 1

H. Stock-Based Compensation - N

H. Stock-Based Compensation - Nonvested Options (Details 1) - $ / shares	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
H. Stock-based Compensation - Nonvested Options Details 1
Nonvested beginning	162,502	168,752
Granted	700,000	775,000
Vested	(700,000)	(781,250)
Forfeited	0	0
Nonvested ending	162,502	162,502
Weighted Average Grant-Date Fair Value, Nonvested beginning	$ 0.23	$ 0.22
Granted	0.19	0.24
Vested	0.24	0.24
Forfeited	0	0
Weighted Average Grant-Date Fair Value, Nonvested ending	$ 0.16	$ 0.23

H. Stock-Based Compensation - D

H. Stock-Based Compensation - Details of stock options (Details 2)	12 Months Ended
	Sep. 30, 2016$ / sharesshares
Options Outstanding
Number Outstanding at September 30 | shares	12,204,000
Weighted Average Exercise Price | $ / shares	$ 0.38
Options Exercisable
Number Exercisable at September 30 | shares	12,041,498
Weighted Average Exercise Price | $ / shares	$ 0.39
0.19-$0.20
Options Outstanding
Number Outstanding at September 30 | shares	250,000
Weighted Average Exercise Price | $ / shares	$ 0.19
Weighted Average Remaining Contractual Life (in years)	9 years 5 months 1 day
Options Exercisable
Number Exercisable at September 30 | shares	125,000
Weighted Average Exercise Price | $ / shares	$ 0.19
Weighted Average Remaining Contractual Life (in years)	9 years 5 months 1 day
0.21-$0.30
Options Outstanding
Number Outstanding at September 30 | shares	3,537,500
Weighted Average Exercise Price | $ / shares	$ 0.27
Weighted Average Remaining Contractual Life (in years)	5 years 9 months 29 days
Options Exercisable
Number Exercisable at September 30 | shares	3,499,998
Weighted Average Exercise Price | $ / shares	$ 0.27
Weighted Average Remaining Contractual Life (in years)	5 years 9 months 18 days
0.31-$0.40
Options Outstanding
Number Outstanding at September 30 | shares	6,551,500
Weighted Average Exercise Price | $ / shares	$ 0.39
Weighted Average Remaining Contractual Life (in years)	4 years 9 months 29 days
Options Exercisable
Number Exercisable at September 30 | shares	6,551,500
Weighted Average Exercise Price | $ / shares	$ 0.39
Weighted Average Remaining Contractual Life (in years)	4 years 9 months 29 days
0.41-$0.50
Options Outstanding
Number Outstanding at September 30 | shares	502,000
Weighted Average Exercise Price | $ / shares	$ 0.45
Weighted Average Remaining Contractual Life (in years)	5 years 2 months 26 days
Options Exercisable
Number Exercisable at September 30 | shares	502,000
Weighted Average Exercise Price | $ / shares	$ 0.45
Weighted Average Remaining Contractual Life (in years)	5 years 2 months 26 days
0.51-$0.60
Options Outstanding
Number Outstanding at September 30 | shares	968,250
Weighted Average Exercise Price | $ / shares	$ 0.59
Weighted Average Remaining Contractual Life (in years)	2 years 9 months
Options Exercisable
Number Exercisable at September 30 | shares	968,250
Weighted Average Exercise Price | $ / shares	$ 0.59
Weighted Average Remaining Contractual Life (in years)	2 years 9 months
0.61-$0.70
Options Outstanding
Number Outstanding at September 30 | shares	56,000
Weighted Average Exercise Price | $ / shares	$ 0.68
Weighted Average Remaining Contractual Life (in years)	14 days
Options Exercisable
Number Exercisable at September 30 | shares	56,000
Weighted Average Exercise Price | $ / shares	$ 0.68
Weighted Average Remaining Contractual Life (in years)	14 days
0.71-$0.80
Options Outstanding
Number Outstanding at September 30 | shares	80,750
Weighted Average Exercise Price | $ / shares	$ 0.76
Weighted Average Remaining Contractual Life (in years)	4 years 2 months 23 days
Options Exercisable
Number Exercisable at September 30 | shares	80,750
Weighted Average Exercise Price | $ / shares	$ 0.76
Weighted Average Remaining Contractual Life (in years)	4 years 2 months 23 days
0.81-$0.90
Options Outstanding
Number Outstanding at September 30 | shares	256,000
Weighted Average Exercise Price | $ / shares	$ 0.9
Weighted Average Remaining Contractual Life (in years)	9 months 11 days
Options Exercisable
Number Exercisable at September 30 | shares	256,000
Weighted Average Exercise Price | $ / shares	$ 0.9
Weighted Average Remaining Contractual Life (in years)	9 months 11 days
0.91-$1.19
Options Outstanding
Number Outstanding at September 30 | shares	2,000
Weighted Average Exercise Price | $ / shares	$ 1.19
Weighted Average Remaining Contractual Life (in years)	6 months 29 days
Options Exercisable
Number Exercisable at September 30 | shares	2,000
Weighted Average Exercise Price | $ / shares	$ 1.19
Weighted Average Remaining Contractual Life (in years)	6 months 29 days

H. Stock-Based Compensation (De

H. Stock-Based Compensation (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation expense recognized in the statement of operations
Research and Development Expenses	$ 0	$ 0
General and Administrative Expenses	141	178
Total Stock-based compensation expense	$ 141	$ 178

H. Stock-Based Compensation (36

H. Stock-Based Compensation (Details 4)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Notes to Financial Statements
Dividend yield	0.00%	0.00%
Unvested forfeiture rate	7.87%	5.35%
Expected volatility	117.00%	137.00%
Risk-free interest rate	1.42%	1.70%
Expected term	5 years 3 months 7 days	5 years 3 months 7 days

H. Stock-Based Compensation (37

H. Stock-Based Compensation (Details Narrative) $ in Thousands	Sep. 30, 2016USD ($)
H. Stock-based Compensation Details Narrative
Unrecognized compensation expense	$ 15,000

I. Income Taxes (Details)

I. Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
I. Income Taxes Details
Accrued payroll related liabilities	$ 885	$ 1,036
Depreciation and amortization	469	586
Total deferred tax assets	1,354	1,622
State Taxes	(94)	(113)
Total deferred tax liabilities	(94)	(113)
Net deferred tax assets	0	0
Valuation allowance for deferred assets	(1,260)	(1,509)
Net deferred tax asset	$ 1,260	$ 1,509

I. Income Taxes (Details 1)

I. Income Taxes (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
I. Income Taxes Details 1
Effective income tax rate	0.00%	0.00%
United States Federal income tax at statutory rate	$ (1,209)	$ (891)
State income taxes (net of federal benefit)	1	1
NQSO forfeiture	151	234
Prior year deferred true up	0	39
Change in valuation reserves	(212)	(153)
FIN 48	1,329	883
Other	(57)	(111)
Provision for income taxes	$ 2	$ 2

I. Income Taxes (Details 2)

I. Income Taxes (Details 2) $ in Thousands	12 Months Ended
	Sep. 30, 2016USD ($)
I. Income Taxes Tables
Unrecognized tax benefits at October 1, 2015	$ 5,085
Additions for tax positions related to current year	117
Additions/reductions for tax positions taken in prior years	6
Unrecognized tax benefits at September 30, 2016	$ 5,208

I. Income Taxes (Details 3)

I. Income Taxes (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
I. Income Taxes Details 3
Current – Federal	$ 0
Current – State	2
Total current	2
Deferred - Federal	194
Deferred – State	55
Total Deferred	249
Less: Valuation Allowance	(249)
Total Deferred	0
Total current and deferred	$ 2	$ 2